In the digital age we live in, the world of finance has undergone a significant transformation. Among the various assets available, bitcoin, commonly known as BTC, has emerged as a popular option.
But is it really better than other assets? In this article, we will explain in detail the bitcoin features and key aspects that differentiate it from other assets traditional.
As we unravel the intricacies of this topic, we’ll find out if bitcoin is, in fact, a better option compared to other mainstream assets.
Before starting it is necessary to define what is bitcoin Bitcoin, the first decentralized cryptocurrency, was created in 2009 by a person or group of people under the pseudonym Satoshi Nakamoto..
Unlike traditional fiat currencies, such as the US dollar or the euro, bitcoin is not backed by any government or central entity. Bitcoin works on a peer-to-peer network, using blockchain technology to record and verify all transactions made..
Faced with this proposal, we have spoken with Ignacio Gimenez, Business Director at Lemon, and in this sense he has told us that: “Bitcoin is the evolution of money, and the gateway to exponential development on blockchain and Web3. It is an immutable, public and transparent monetary policy. Not only has it become a store of value, but it has also been the greatest generator of wealth. Since it was marketed, it went up more than a million times”.
Advantages of Bitcoin as an asset
Regarding the advantages of bitcoin as an asset, it should be taken into account that in relation to the decentralization and privacy offered by the cryptoactive, other assets cannot match it. By not depending on intermediaries such as banks, bitcoin transactions are made directly between the parties involvedensuring greater privacy and control.
Another of the most outstanding features of bitcoin is its limited offer. A maximum of 21 million bitcoin has been established that may exist in total.
Also, from time to time an event occurs known as “halving“, in which the rewards of Bitcoin miners are cut in half. This contributes to scarcity and potentially increases its value in the long run.
Regarding this, Ignacio told us in the conversation: “Why is it the best store of value technology? First for your predictability and limited supply of 21M Bitcoins. The fact of being able to predict how much my present effort will be worth for future enjoyment. From now to the year 2140 we can know how many Bitcoin will be in distribution with an update of 10 minutes on-chain”, assures Gimenez.
He goes on to say that:Second, energy. We are storing money in something very precious like energy. This ends up not only securing the network but fulfilling a lot of use cases that allow us to consider the asset as a great battery that will keep all systems and projects optimized.”.
Additionally, it should be mentioned that the Bitcoin network enables fast and efficient transactions compared to traditional financial systems. Also, being a digital currency, bitcoin transcends geographic borders and facilitates international transactions without the complications and delays associated with conventional banking systems.
Bitcoin Challenges and Volatility
Despite its popularity, bitcoin has been known for its extreme price volatilitys. Investors must be prepared to face significant fluctuations in the value of bitcoin in short periods of time, which can generate uncertainty and risks in the market. In addition to this, factors such as regulation also influence the price of the asset.
He Regulatory landscape for Bitcoin and other cryptocurrencies is still developing in many countries. Regulatory uncertainty may raise concern among investors and limit the mass adoption of bitcoin as an asset.
Ignacio points out that:currently already there are more than 1M wallets with 1 Bitcoincompanies and countries looking for a way to adopt the asset in their reserves or as legal tender, committees to analyze how to face its growth and success stories like El Salvador and/or several Latin American countries with users creating new financial and internet solutions on blockchain that do not exist today but that will mark tomorrow’s agenda”.
Bitcoin vs. Other Assets
Stocks are one of the most popular assets in traditional financial markets. Unlike stocks, bitcoin does not represent a stake in a company or entity. However, bitcoin has proven to be an asset with growth potential, especially in the long term, due to its limited supply and constantly increasing demand.
Gold has long been considered a safe store of value and a hedge against inflation. While bitcoin shares some characteristics with gold, such as its scarcity, bitcoin has additional advantages, such as ease of transfer and digital storage, as well as the ability to make instant transactions globally.
Traditional fiat currencies, such as the US dollar or the euro, are issued and backed by governments. Unlike these currencies, bitcoin offers a decentralized alternative and censorship resistant. Also, inflation and fiat currency manipulation are factors to consider, while bitcoin is designed with a predictable monetary policy.
Comparison between gold, fiat currencies and cryptocurrencies – Source: Investopedia
Having analyzed the strengths and virtues of bitcoin compared to other options in the traditional financial market, it is pertinent to bring up what Gimenez told us when we asked him about Lemon’s decision to return a percentage in bitcoin of the purchases made with the card offered by the platform, and in this regard said that: “There are already more than 800,000 cards in circulation and we are more than 1.8 million Lemon users. We choose to return bitcoin and not points, miles or pesos, because we know that the asset is the first step for the user to end up exploring the future of money and the internet”.
Evolution of the Bitcoin network
The positive thing about the Bitcoin network is that, thanks to recent developments, it no longer only supports the bitcoin cryptocurrency, but also through the BRC-20 and BRC-721 it is already possible to add fungible tokens and non-fungible tokens to the bitcoin network as we have explained here in Cointelegraph in Spanish.
This demonstrates that this technology continues to be at the forefrontand in this sense the Business Director at Lemon told us that: “We note that efforts are being made to innovate use cases and applications on top of the Bitcoin network. This type of development has already been experienced in the Ethereum network with different types of projects and standards, so it could be a great opportunity to do it on Bitcoin, the most decentralized network that exists today.”.
As a last resort, The decision of whether bitcoin is a better option than other assets depends on the individual circumstances and goals of each investor.. Staying informed and abreast of the latest trends and news related to bitcoin and the financial markets is essential to making informed decisions.
What cannot be denied is that bitcoin has captured the attention of the financial world and has proven its value as an alternative form of investment.. However, one should always proceed with caution and consider the risks and benefits before engaging in this exciting but volatile market.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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